A virtual private network (VPN) can be defined as a network that uses a public telecom infrastructure to provide remote offices or individual users with secure access to their organization's network. A VPN works by using a shared infrastructure while maintaining privacy through various security and confidentiality procedures.
Till recently, most of the VPN infrastructures were built using Frame-Relay or ATM networks connecting customer sites via virtual circuits (VCs). However, with a tremendous increase in customer requirements (such as video conferencing) and the eventual complexity of developing networks, a need for a more scalable approach was felt. MPLS VPN technology is proving to quite useful in this regard. MPLS VPN is a set of processes that use the power of Multi Protocol Label Switching (MPLS) to create virtual private networks (VPNs). MPLS is designed to meet the characteristics of a large-scale carrier network and integrates the best of layer 2 and layer 3 technologies. A layer 3 MPLS VPN, also known as L3VPN, combines BGP signaling, MPLS traffic engineering and router support for VRFs (Virtual Routing/Forwarding) to create an IP based VPN. Compared to other types of VPN, MPLS L3VPN provides a connection-oriented approach towards customer routing. It also provides a more cost efficient way to manage applications between different locations and can provide more services.